Alison Carnwath believed that Barclays’ former chief executive should have set an example by not taking a bonus
Alison Carnwath, Barclays’ former pay chair, has revealed she was a lone voice on the bank’s board in recommending the bank’s former boss Bob Diamond receive “zero” bonus in 2011.
In written evidence before the banking standards commission, Carnwath said Diamond was reluctant to accept pay at the bank was high and was overly protective of the investment bank arm he headed before taking charge of the whole bank. Diamond left left days after the £290m fine for rigging Libor.
Carnwath said her view was Diamond should have set an example by not taking a bonus of £2.7m recommended by the former chairman Marcus Agius – because of the political environment and poor returns of the banks. Carnwath told MPs she thought bankers’ pay had reached “obscene” levels in some circumstances.
She told the committee, chaired by conservative MP Andrew Tyrie, that she was “amazed” by Agius’ recommendation. In her written evidence, she said: “My determination was quite straightforward, return to shareholders had been poor and Mr Diamond needed to set an example to all stakeholders that remuneration policies had to change to reflect the low return environment”.
The chairman of property company British Land, Carnwath herself quit the board less than a month after the fine was announced in June and after she received a protest vote about the bank’s pay policies at the annual meeting in the spring.
She was the chair of the remuneration committee which set the pay of Diamond and other executives at Barclays and said she felt the former boss should not have had a bonus because the bank’s returns to shareholders — measured as return on equity, or ROE — were not good enough.
“In my view Barclays were demanding too much patience from their shareholders and were insufficiently sensitive to the political and economic environment and the hostile attitude to banks generally,” she wrote.
“Barclays returns in 2011 were not good from a shareholder’s perspective with the key measure of ROE (and substantially lower leverage) not covering the cost of capital and the share price and dividends showing poor returns. It was for this reason that I disagreed with the board chairman’s recommendation on Mr Diamond’s annual bonus for 2011,” she added.
” I recommended zero. I was alone in my view both on the committee which I chaired and on the board,” she said.
She said the remuneration committee was ” aware that pay was at the top end of the scale” and had asked Diamond “to take a leadership position and clarify the pay culture to staff”.
“Mr Diamond was reluctant to do this and reluctant to accept pay at Barclays was high particularly in the investment bank,” she said.
Agius — who also quit in the wake of the Libor scandal and has been replaced by Sir David Walker — had agreed the “tax equalisation” bill with Diamond which resulted in a £5.7m bill for the bank. Diamond took home £17m in 2011 before the tax payment.
At the bank’s annual meeting some 22.5% of investors failing tosupport her because of her status as chairman of the remuneration committee.
Her successor as chair of the remuneration committee, Sir John Sunderland, is also due to give evidence.